Iraq to review security firms after deadly shootout

Iraq declared on Tuesday it will review the operations of all security firms working in the war-ravaged country following a deadly shootout involving private US contractor Blackwater.

A top judge also said that Blackwater could face trial over Sunday's incident in Baghdad, which left 10 people dead and was branded a "criminal" act by Iraqi Prime Minister Nuri al-Maliki.

Washington has sought to cool tensions with Baghdad over the shooting, with US Secretary of State Condoleezza Rice calling Maliki to express her regrets over the civilian loss of life and pledging a full investigation.

"The cabinet in a meeting decided to review the operations of foreign and local security companies in Iraq," government spokesman Ali al-Dabbagh said in a statement.

The review will determine whether these companies operate in "compliance with Iraqi laws," he said.

Dabbagh said the cabinet also backed the interior ministry's decision on Monday to cancel Blackwater's operating licence.

The death toll from the shooting in the Al-Yarmukh district, which involved Blackwater guards escorting a US diplomatic convoy, has risen to nine civilians and one policeman, according to a medic at the local hospital.

US and Iraqi sources in Baghdad said the shooting erupted after a bomb exploded near a US diplomatic convoy, but a US government incident report said armed insurgents fired on the convoy and Blackwater guards responded.

"This company is subject to Iraqi law and the crime committed was on Iraqi territory and the Iraqi judiciary is responsible for tackling the case," he said.

The judge said the case against Blackwater -- which is one of the biggest private security firms operating inside Iraq with about 1,000 staff -- could be filed either by relatives of the victims or by the government.

Despite the interior ministry order, a US embassy official said on Tuesday that Blackwater had not been expelled.

"Blackwater is still here. The US authorities are holding discussions with the Iraqi counterparts over the issue," the official told AFP.

The shootout came as the spotlight was focused on the future strategy of the United States in Iraq, where top commanders are forecasting a troop drawdown in the coming months.

US Secretary of State Condoleezza Rice called Maliki on Monday to "express her regret over the death of innocent civilians that occurred during the attack on an embassy convoy," US State Department spokesman Tom Casey said.

But Maliki's office said Rice went further and had "apologised personally" as well as assuring him that a detailed investigation would be conducted.

According to a US government incident report, the "skirmish occurred... when the (US) motorcade was engaged with small arms fire from several locations as it moved through a neighbourhood of west Baghdad," Time magazine reported.

"The team returned fire to several identified targets," it quoted the report as saying.

"Some eyewitnesses said the fighting began after an explosion detonated near the US convoy, but the incident report does not reflect that," it said.

A US embassy spokeswoman in Baghdad, Mirembe Nantongo, told reporters on Monday that Blackwater guards "reacted to a car bomb."

A Blackwater official told Time that "contrary to some reports from Iraq, the convoy was violently attacked by armed insurgents, not civilians, and our people did their job, they fired back to defend human life.'"

The Iraqi interior ministry's director of operations, Major General Abdel Karim Khalaf, said its investigaton into the incident will be completed in a day or two.

Political analyst Peter Singer, in an article posted on the Brookings Institution website, said the US military in Iraq was stretched thin and that Washington will have to use Blackwater contractors in the short term.

Washington will have to "ignore the Iraqis' wishes and just keep on using Blackwater contractors as before; find another company to step in and quick-fill take on these roles in lieu of the firm; or negotiate with the Iraqis to find terms under which (Blackwater) might continue to carry out the operation," he said.

Blackwater first made headlines in Iraq when four of its contractors were found hung on a bridge in the former rebel bastion of Fallujah in 2004.

Meawhile, 13 people were killed in bomb attacks in Baghdad, including seven who died when a car bomb and a mortar targeted a morgue filled with people looking for their missing relatives, security officials said.